For the unwary investor, Russia is a snare. And even old hands can be caught out
Moscow inquiring about the outlook for Russia’s economy will often be met with answers that take a detour into the country’s past. Ask, for instance, why Russia runs such conservative budgetary and interest-rate policies and you may be told that the trauma of default in 1998 bred a strong desire for low debt and low inflation. Ask why property rights are weak and you may be taken further back, to the end of serfdom in 1861. Until then many Russians did not even own their own souls.
By stopping the government from overspending, the fiscal rule also helps keep a lid on inflation. The Kremlin allows the central bank to set monetary policy without meddling, to meet a goal of inflation of 4%. The bank’s governor, Elvira Nabiullina, is admired for her professional competence—and also for persuading Vladimir Putin, Russia’s president, to allow the rouble to drop in 2014. Inflation has since come under control. She has cut interest rates slowly, to 7.5%.
But Russia is a more hazardous place for equity investors. A stock ought to be a claim on a company’s assets. A quick survey of modern history throws up reasons to doubt that such claims are secure. In 2003-04 the state seized Yukos, a giant oil company. More recently a dispute over oil assets between Rosneft, the state-backed firm that absorbed Yukos’s assets, and Sistema, a big conglomerate, rattled investors and gutted Sistema’s share price.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
U.N. looks for U.S.-Russia understanding to spur Syria peace process'A deeper understanding' between Russia and the United States is neede...
Read more »
Drunk Russian police officer shoots boy in stomach after he kicked a ball into his carA criminal probe has been launched into the officer from Kursk, Russia.
Read more »
Senate Russia report coming after July Fourth recessThe Senate Intelligence Committee’s bipartisan report on Russian interference in the 2016 election is on track for public release next month
Read more »
Tillerson: Trump faced 'steep learning curve' on US-Russia policy, immigrationFormer Sec. of State Rex Tillerson told lawmakers in May that Pres. Trump faced “steep learning curve” dealing with both U.S. relationship with Russia and immigration laws, according to transcript of his closed-door interview released by a House committee.
Read more »
Russia frees first captive whales after outcryRussia released two killer whales and six beluga whales back into the wild on Th...
Read more »
Russia Fines College Student for 'Contempt' After Filming Dance Near War MonumentA young Russian woman has been fined under a recently introduced 'contempt of authorities' administrative regulation after she published an Instagram video of herself performing a dance.
Read more »